Expert says real estate market needs major price adjustment

Alan Phan, a famous Overseas Vietnamese fund manager, has answered criticism over his opinions that the Vietnamese real estate market should be left to fall. Dr. Alan Phan argued it would be preferable if housing prices fell by an additional 30%-50% Controversial saying In late March, Alan Phan, chairman of the Hong Kong-based private-equity fund Viasa, told VnExpress that the move would pull down housing prices by an additional 30% to 50%. This would mean they matched people’s incomes and facilitate more medium-income people to buy houses. He estimated that when the real estate market fell, bad debts in the banking system would sharply increase and a lot of banks would go bankrupt as the country now has too many banks. “It doesn’t matter if a half of current banks are bankrupted when the government takes measures to prevent people from financial risks. A bank crisis would result in a tumble in the stock market but investor confidence would be revived then and a new stage of economy would start,” he emphasised. He said that the government’s plan to give VND30 trillion (USD1.43 billion) in refinancing to several banks to lend out at a preferential interest rate of 6% for three years to house buyers is unfeasible This is because the funding might just “stop the bleeding, but will not heal the injury”. “The market should be left to regulate itself, and it will bounce back in four or five years,” he said. Phan’s views have stirred public concern and… [Read full story]